Rebalancing Investing AccountsPosted by RickAstley on 9/18/13 at 9:45 am

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I started an account rebalancing effort this past month to consolidate my funds and reduce fees/taxes. I am interested in some of the board's knowledge on the type of funds that I should keep primarily in a tax-advantaged account versus a taxable account.

I have a 401k, Roth IRA, and a taxable account. I only own index funds and I plan to maintain that for the foreseeable future. Is there a preference for where the dividend paying funds should go, bond funds, and total stock market between the three accounts? I am very much a novice on the topic though I am making a push to be more active in managing my money for the long term.

If more information is needed, I will do the best I can to provide it. I fall in the mid-20s age group, and my accounts are through either John Hancock or Vanguard.

The type of funds isn't necessarily that important for your Roth and 401k in terms of taxability as only contributions or distributions will be taxed depending on which one of these you're talking about. However, the taxable account will have more sensitivities towards the type of returns your recieve whether it be through dividends or capital appreciation. I'll defer to poodlebrain for the specific tax implications as I hate accounting and taxes.

If you would like information on asset allocation I'd be much more helpful. What's your current allocation look like? You can categorize it any way you want, I'll get a pretty good idea regardless.

re: Rebalancing Investing AccountsPosted by RickAstley on 9/18/13 at 10:06 am to Maderan

quote:Rebalance into your losers. You are buying into to a category you like at a lower price. Will help your long term performance.

Taking that into consideration, I wish to own index funds for stocks, bonds, and REITs. In order to minimize any tax hit I may take, would it be in my best interest to keep all of one fund in a Roth IRA versus a taxable account. Or in a 401k rather than a Roth IRA?

I am reaching the end of the first year of my investing career with a 30-40 year timeline before I see retirement happening. Yes this is weighted very heavily in stocks, though if it all went to $0 today I would not be living on ramen. I still maintain a sustainable emergency fund and a savings account which I have not included in the numbers above. Simply due to that money being used for expenses while my current paychecks are being used to dollar cost average my contributions in my 401k and my taxable account through Vanguard.